Bettor handicapping and market efficiency in greyhound parimutuel gambling
This paper evaluates the speculative efficiency of the parimutuel gambling market for greyhound racing. The efficiency tests consider the informational content of bettor handicapping data as well as the forecasts of professional handicappers and the aggregate market. Previous studies have failed to consider the wide range of performance data that are available for bettor handicapping activities. Two tests of efficiency are considered. The first test evaluates the in-sample explanatory power of the handicapper's forecasts and handicapping data relative to the aggregate market's forecasts, as indicated by the final odds. The second test compares simulated rates of return to hypothetical gambling obtained from ex ante finish forecasts to the efficient rates of return that are dictated by the track's commission. Significant speculative inefficiencies are revealed. The second test suggests the existence of above-normal returns to gambling from using conditional forecasts generated from bettor handicapping data.